World dairy demand set to outstrip supply

New opportunities for European dairy producers are expected with world demand predicted to rise by 2.3% annually, experts at a key Copa-Cogeca seminar stressed.

At the seminar, attended by representatives from across the EU, opportunities on the world market for European dairy producers were assessed, with experts forecasting demand to rise by 2.3% annually, driven by increases in the emerging economies like China. In China, dairy consumption per head has increased already by as much as 317% over the period 1998 to 2013 to reach 25 kg. And the potential market is still huge, with consumption forecast to double in China by 2020, experts claimed.

But the same experts stressed that the type of demand will be different, with a different product mix, increasing especially for infant formula. EU producers have to adapt to the markets.

EU production is meanwhile expected to grow modestly over the next ten years, mainly absorbed by cheeses. But experts warned of the logistical problems associated with exporting produce to non-EU markets like veterinary certificates, export licences, plant registration or approval.

Copa-Cogeca Chairman of the milk working party Mansel Raymond highlighted the need for EU producers to be in a position to make use of the growing market opportunities, with the aim of improving farmers incomes. He consequently urged the EU Commission for support to help cut bureaucracy and red tape when exporting produce to non-EU markets and be a major exporter on world markets. Copa-Cogeca Secretary-General Pekka Pesonen meanwhile emphasized the importance of EU dairy production as a key economic driver in rural areas. But he highlighted the need to address the challenge of increasing volatility on dairy markets in a market orientated way. Copa-Cogeca believes current tools to address the volatility like public intervention are important. Futures markets could help to take some volatility out of the market. The milk observatory system could prove useful. The modernization of dairy cooperatives in rural areas should also be encouraged and facilitated.

Implementation of the EU milk package which aims to strengthen contractual relations between farmers and processors and improve farmers’ position, enabling them to get a better price for their milk, was also looked at. The milk package has so far been implemented on a voluntary basis in UK, Belgium, the Czech Republic, Denmark, Estonia, Germany, Netherlands, Poland, Sweden and on a compulsory basis in Cyprus, France, Spain, Hungary, Lithuania, Latvia, Portugal, Slovenia, Slovakia, Italy Romania and Bulgaria.

And Mr Raymond said “Written contracts help to give producers some stability and a fairer balance. But the package is only in its infancy and it will take time to see the impact”.

The seminar came ahead of the EU Commission report due out in June on review of the milk package and market developments.